China securities regulator to focus on stability, reform

BEIJING – China will focus on stable development of its capital markets this year, but will press ahead to further open its markets to foreign companies, the top securities regulator said on Sunday.

“We will not waver from reforms (to make China’s capital markets) more market-based, law-based and international,” Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), told a news conference in Beijing.

Chinese regulators have turned their sights on controlling risks in financial markets as speculative activity and leverage in the economy rise, with the securities regulator vowing to clear out “abnormal phenomena” from capital markets.

The CSRC recently pledged to target “barbaric” leveraged buyouts and to restrict excessive fundraising by some listed companies, with a focus on private share placements.

Liu said earlier this month that CSRC would take down law-breaking financial tycoons he called “giant crocodiles”, saying they will not be allowed to take advantage of retail investors.

China’s crackdown on illegal market activities has intensified since the mid-2015 stock market crash that wiped out almost $3 trillion of share value.

Liu, who was appointed CSRC chairman in early 2016, said that balancing the needs for stability and progress were crucial, especially in managing the primary market.

Limiting or halting initial share sales in order to stabilise the secondary market doesn’t “solve the problems of long-term healthy development of capital markets,” Liu said.

CSRC deputy chief Fang Xinghai said at the same news conference that China is discussing measures that would allow foreign firms to take a larger stake in domestic joint venture securities and futures brokerages, without providing a timetable for any changes.

Morgan Stanley and UBS Group AG are set to raise their stakes in their separate Chinese securities joint ventures to 49 percent, people with direct knowledge of the moves confirmed last month.

Fang also said there was no timetable for the launch of an international board that will allow foreign-invested enterprises to list shares domestically in China, adding that issues such as accounting treatment and disclosure rules were still being studied.

Liu declined to confirm a Reuters report on Friday that regulators are considering offering a shortcut for some of the country’s largest technology companies to list their shares on domestic markets, allowing them to jump a long queue of applicants and boost domestic bourses.

China has been losing out to the New York Stock Exchange (NYSE) and Nasdaq on key technology listings, so more IPOs at home could mean millions of yuan in revenue for Chinese investment banks, who dominate domestic stock issuance. -Reuters